Asia-Pacific Social Science Review 18(2) 2018, pp. 80–98

RESEARCH ARTICLE

An International Political Economy Perspective on Regional Integration Process in Northeast Asia: Coopetition in a Context of Hegemonic Ambitions

Paul André Waseda University, Japan [email protected]

Abstract: This paper studies regional cooperation in Northeast Asia. Relations between , South , and Japan are featured by simultaneous centripetal and centrifugal forces. The three economies are increasingly interconnected and interdependent, and a rising number of problems are transnational (pollution or any problem with externalities). However, the three countries remain reluctant to cooperate with one another especially because they keep regional ambitions or the other agents’ ambitions are perceived as a threat. In such a context, it can be argued that trilateral relations in Northeast Asia are better described by coopetition than cooperation. As a consequence, regional collaboration in Northeast Asia will be unstable and scalable. That is why we can be reasonably pessimistic about regional cooperation in Northeast Asia. The cooperative relationship is by nature unstable and evolutionary. I, therefore, maintain that regional cooperation in Northeast Asia is a result of circumstances and it is a second-best strategy.

Keywords: coopetition, China, Japan, , regional integration

This paper tackles the question of regional and 2015, no meeting has been held at the executive integration in Northeast Asia from the methodological power level. It was not until the opening speech of the framework of an international political economy World Policy Conference (WPC) on December 8th, (IPE). This study focuses on the relations between 2014 that one of the three head of the executive called three countries: Japan, the People’s Republic of again for cooperation between the three countries. China (hereafter China), and the Republic of Korea During her opening speech of the WPC, then South (hereafter South Korea). According to the figures Korean president Park Geun-hye took the example of of the (2016) and the International the European integration. She stated that “Confidence Monetary Fund (IMF, 2016), these three countries must absolutely be restored in Northeast Asia” (Park, represent approximatively 25% of the world GDP. 2014). Shortly thereafter, on November 1, 2015, Between 2005 and 2012, Korean, Japanese, and the sixth trilateral summit was held under the aegis Chinese leaders met only five times on the occasion of the Trilateral Cooperation Secretariat (hereafter of major trilateral summits (TCS). But between 2012 TCS) which was resurrected on that occasion. What

Copyright © 2018 by De La Salle University An International Political Economy Perspective on Regional Integration Process 81 is at stake in this summit, and eventually in regional I propose to study Northeast Asian cooperation in cooperation, is the institutionalization of the three the perspective of different actors’ interest under the countries’ relations and, thus, to boost their global concept of coopetition. I will try to see to what extent influence. this of rivalries and disputes is suitable and That is indeed a big issue for the following reasons.1 efficient to ensure long-lasting peace in the region. To First, because economic development of the three what extent can the concept of coopetition allow to countries of the region has structurally changed their tackle regional integration process in Northeast Asia? economies. Rising economic interdependence has been noted in all three countries. Second, because regional Why Coopetititon? integration—thus, following the European path— My analysis assumes, as a starting point, that the seems to be the better (or the best?) way to guarantee actions of states are conducted within the framework that geopolitical tensions are cooled down. Ultimately of an interdependent international economy. In it seems to ensure peace; eventually, because the this respect, my IPE approach is a state-centered international context has rapidly changed over the perspective which takes into account interactions with last months. Opened and exporting Northeast Asian private actors and strategies and their influence of the economies are exposed to the protectionists’ threat the latter. The concept of coopetition was popularized by Donald Trump’s presidential victory has created. In Brandenburger and Nalebuff (1995). However, it had addition, the renewed tensions caused by North Korea until then little use in IPE. Assuming, that coopetition invites us to reconsider the relations between the three is the opportunistic collaboration between economic actors, overcoming in that sense of logic inherited from or statist actors which are otherwise competitors. the cold war. So, it is a matter of each actor to preserve its own Haggard and Fishlow (1992) have demonstrated interest while sharing some resources with selected that regional integration can be market driven or policy competitors. In this paper, I will mostly focus on the driven. However, empirically, it is noted that the two use of this concept in the analysis of foreign policies dimensions are at stake in each case. In the case of (diplomacy and economic relations) of the three market-driven regional integration, it cannot be denied studied countries. However, it is worth noting that that state logic is also involved and, thus, governments the analysis should not be limited to a state-centered cannot be excluded from the process. That is, for vision because government interests are also, to a instance, the case when national security or economic certain extent, those of corporations of the country interdependence is at stake. Symmetrically, in case of and conversely. policy-driven regional cooperation, it is observed that political decisions can provide opportunity effects to Geographical Limits some corporations which can, therefore, get a market power (Tirole, 1988). This paper will study relations between Japan, China, and South Korea. This choice is made in the The Puzzle positive and in the negative. In the negative, because it seems that having North Korea in the list of countries Between 1945 and the late 1970s, East Asia was to study would change the perspective of the analysis the stage of the most important conflicts in the world. drastically. Indeed, it would introduce a prevailing Since then, the region is one with the lowest number of security dimension which is not necessarily the case as war victims, but tensions remain numerous especially in tripartite relations. It is the same—but for obviously among regional powers (Sino-Taiwanese tensions, different reasons—if Taiwan would be included in territorial disputes, historical grievances, etc.). Some the analysis. In the positive because it seems that the might point out the remaining tensions, but the other concept of coopetition brings a potentially new and side of the coin is that those disputes never ended, so accurate perspective to the economic and political far, in conflict. relations between these three countries. Moreover, reviving the TCS is a meaningful element, but it shall 82 P. André not be forgotten that latent rivalry (economic and with one another. If the feeling of a common regional political) remains between the three actors. identity can be the starting point or the driving force behind a process of regional integration, such a process Time Limit cannot, however, be limited to this sole factor. First of Without neglecting the historical dimension of all, regional identity—in this case, Northeast Asian—as the relations between the three countries, my survey a political identity is a product of a constructed identity, mostly focuses on the contemporary period (2012– a reinvented one. Then, because such a process caries 2016). In 2012, the three new leaders (Xi Jinping, far too serious implications to be limited to the sole Abe Shinzo, and Park Geun hye) took office. This identity and symbolic dimension, regional integration period corresponds to the cooling relations between is, perhaps above all, a matter of interests of nation- China, South Korea, and Japan. And then by 2015, as state and individuals. Therefore, cooperation exists mentioned, a détente. if the players have an interest in it. Observing the international stage led realists to consider international Structure of the Survey relations in a Hobbesian way. Insofar as there is no supranational authority, each state seeks, primarily, This paper is divided into three parts. First, I aim at to ensure its survival. Realists, therefore, believe that analysing the logic of the cooperation process at stake governments must foresee the worst in their interactions in Northeast Asia. The purpose is to identify incentives with other states. However, interesting it may be, this to cooperate and to present the theoretical framework approach has the disadvantage of underestimating the of the analysis. Then, the different strategies at actions of sub-statist actors. Then, this framework of stake will be studied: Japan, China, South Korea analysis only partially explains the cooperation at work and other stakeholders who may be impacted by the between the three nations for several years. result of a process of cooperation in Northeast Asia. The first comprehensive theoretical explanation As mentioned, North Korea and Taiwan will not be of international cooperation—and so of regional studied per se. However, these two actors, as well as integration—has been proposed by IPE scholars. The the U.S. and ASEAN, will nonetheless be included as reasons the states cooperate with each other are largely stakeholders. Eventually, in the third part, I will show derived from the theory of regimes.2 In this respect, the that considering diverging ambitions, Northeast Asian mainstream paradigm in the IPE theoretical study of governments moving closer may be more coopetition international organizations (IOs) came from the public than real cooperation. The framework of analysis of choice theory also sometimes called “the economic coopetition will first be reminded then I assume that theory of politics” or “(new) political economy”. This coopetition allows a cooperative game in a logic of framework argues that IOs are the product of a rational economic war or of geo-economics. The conclusion and strategic effort by states to further their common reminds how difficult it remains to establish a dialogue interests by delegating authority to another actor—an between each three countries and this may partly actor with its own goals and interests. As Frey stated: explain the use of coopetition instead of cooperation. This situation questions common interest and common The international community presents an identity of actors and, thus, the viability of real ideal case (in the sense of Max Weber) for cooperation in North East Asia. constitutional or social contract: the underlying units are sovereign (there is no preexisting world Analyzing the Logic of the Process government) but their behavior results in a clearly Pareto-inferior situation. Although Rationality of Actors the constitutional contract is normally applied The study of the process of regional integration to individuals (Buchanan & Tullock, 1962) in Northeast Asia first implies to wonder the reasons (Brennan & Buchanan, 1980) (Mueller, 1996), why China, South Korea, and Japan would cooperate it can also be applied to nations as actors (e.g. An International Political Economy Perspective on Regional Integration Process 83

Forte, 1985). Indeed, the Hobbesian jungle of of aggregating preferences, promoting cooperation belum omnium contra omnes seems to be even and seeking to ensure that states comply with their more relevant for the interaction among nations. obligations” (Paquin, 2008, p. 193). Military and trade wars (protectionism) with their When regional cooperation tends to be destructive outcomes for all participants are all institutionalized, then relations—especially economic too common events; international public goods and financial relations—tend to be more predictable (e.g. those relating to the global environment) and eventually more stable (Keohane, 1989; Keohane are underprocessed and international common & Martin, 2003). This is a very important point because property resources (e.g. the fish in the seas) are any process which deepens international cooperation overexploited (see, e.g. (Olson, 1971)). There leads to internal tensions arising from changes in is no world government in sight that would . Insofar as regionalization be able to control effectively the behavior of process allows a flow of information, it helps to inhibit nations pursuing their own selfish interests. certain fear and apprehension. As Paquin stated, “the A Pareto-superior outcome can only come majority of decision-makers consider that the assurance about voluntary consent among the nations. of international cooperation is no match for intense Countries that do not find the expected pressure movements in domestic policy” (2008, cost-benefit ratio of common action to be p. 193). The flow of information can then facilitate the worthwhile for themselves do not join. Only integration process. There would be then a form of a a consensus among participants constitutes a self-sustaining dynamic of regional integration. social contract of practical consequence. Hence, Information has a crucial role in international the question is not whether the set of all actors cooperation. The centralization of talks within the reaches a consensus but rather over what set of framework of a regional forum provides a better flow issues some actors are able to agree (Frey, 1983). of information. As Abbott and Snidal (1998) have (Frey, 1997, pp. 107-108) demonstrated, “IOs allow for the centralization of collective activities through a concrete and stable Following the public choice approach to organizational structure and a supportive administrative international cooperation, it is assumed that there is apparatus. These increase the efficiency of collective regional integration because it provides a number activities and enhance the organization’s ability to of solutions. In a public choice theory perspective, affect the understandings, environment, and interests it would then be an optimal or a second-best choice. of states” (pp. 4–5). An international organization can, One of the main benefits of regional integration therefore, maximize the state’s goals. It also minimizes within common institutions is that uncertainty would political shocks. Insofar as IOs—in this case, regional be reduced and cooperation would be made easier. cooperation—provide information, they have a Neoliberal institutionalists consider that this on-going specific competence which provides an advantage to process allows actors (state or private actors) to obtain member governments. International organizations are, information about the behavior and intentions of other therefore, in a position to offer specific information and actors. IOs can be seen as a supplier of information. data but also technical assistance and even, in some These kinds of information are of better quality and cases, financial aid. These elements are important more numerous. Information favors cooperation— because they can reassure decision-makers—in a crisis especially when benefits are expected (Paquin, 2008, situation.3 p. 193). The importance of the information variable is Indeed, if intergovernmental cooperation has some crucial in international relations. As actors have advantages, it also carries costs and constraints. The more information, it enables them to have better first constraint would be that each member will have anticipations and a better understanding of other to share information. So the question is: why should actors’ behavior. This makes cooperation easier and a government accept to respect its international simpler. “International organizations have the function agreements while it could adopt a free-rider strategy? 84 P. André

Free-riding offers the advantage to enjoy stability responsibilities” (Frey, 1997, p. 116). This hypothesis brought by international cooperation without bearing can be interesting for governments of Japan or South its constraints. In the case of East Asia, this question Korea. However, considering the issues at stake in the of free-riding arises for two reasons. First, projects region, such a hypothesis seems not enough to explain of regional cooperation are poorly institutionalized regional cooperation in Northeast Asia. Eventually, a and lack enforcement mechanisms. For instance, fifth explanation would be that national politicians use APEC is only a forum. Alternatively, those projects the IO “to weaken the power of competing domestic do not have such mechanisms—as it is the case for lower-level governments and independent public ASEAN. Moreover, it appears that the efficiency institutions such as the courts, the central bank, and of an international organization largely depends regulatory agencies” (Frey, 1997, p. 116). Here again, on the willingness of member states to meet their this explanation does not seem to be meaningful enough commitments (Paquin, 2008, p. 195). In this respect, to explain the main reasons for the process. However, if institutionalized sanction and control measures can it can be an additional benefit of regional cooperation. provide some guarantees, they can be tools to prevent Especially in the case of China, the leadership may use free-riding. the TCS or sectorial aspects to muzzle factions within In the case of trilateral relations in Northeast Asia, the Party and, thus, keep the control over the Chinese it can be wondered why national governments would Communist Party (CCP). accept to transfer competencies to an international organization. Such behavior would lead to the Theoretical Framework restriction of their discretion and reduction of their To analyze the costs and benefits for nations power. Several explanations have been suggested which participate in the regional integration, the (e.g., Frey, 1997, p. 116). The first incentive for methodological choice to tackle this aspect is to national leaders to see their country joining an IO is use public choice theory in the context of IPE. An that they can protect or raise their power vis-à-vis the international organization can provide various services: governments of non-member nations. In the Northeast it provides public goods or services; it coordinates Asian case, it can be an argument for South Korea vis- activities of actors of the international system; and it à-vis North Korea or China vis-à-vis Taiwan. Another creates a set of institutional alliances. International reason can be that joining an IO can serve to reduce organizations can also be used for private purpose, criticism and opposition. On the domestic level that is that is, national purposes. Therefore, it would be a 4 the “political dustbin” theory. In the case of the TCS, mistake to assume that IOs maximize all the collective such an approach does not seem particularly relevant. economic surplus (well-being). However, it may be more relevant on the international As mentioned, the problem of free-riding is one level. For instance, China can muzzle international of the hurdles to be overcome before any effective critics on the nature of its political regime or its state collaboration among Asian nations can happen. capitalism. Joining the TCS could allow China to argue The first difficulty is the size of the region. It has it is involved in a regional cooperation process with been empirically proven that small international two other democracies. A third reason in the Northeast organizations or regional ones tend to be more Asian case could be that cooperation could maintain successful than larger ones. Since IOs create selective nationalistic pulses under control. Since regional incentives for their members, this can explain the cooperation leads to a certain level of homogenization, relative success of international organizations of voters (or citizens in China) have less scope to limited range. The very existence of such private protest (to raise their voice) or to exit (Hirschman, goods is an important negotiation tool used by 5 1970). Fourth, “joining an international organization governments when they try to convince Parliaments to tends to blur the division of responsibilities between join an organization. A tremendous effort is devoted to it and the national government, which enables transforming a public good into a private good which domestic politicians to at least partially shirk their would be the monopoly of the organization. Eventually, An International Political Economy Perspective on Regional Integration Process 85

coercion is difficult—and often impossible—in the in which total benefits bt and total costs ct are a function international context because member states are not of cooperation activity or output Q. Each nation is willing to lose their independence. assumed as an individual actor who tries to maximize As explained by Frey (1997, p. 109), “the formation its own personal net gain g, which is the difference of international agreements can be usefully analysed between individual benefits ib and individual costs ci. with the help of club theory which stresses the If it is assumed that B is the part of the country voluntary nature of membership and the exclusion of for benefits, therefore, B= ib /bt. If C is assumed as the non-members who may not benefit from the goods part of the country to the total cost, then C = ci/ct. As jointly provided.”6 However, the “club” can only be a consequence, the optimal degree of international created if agents accept a certain veil of uncertainty. activity for a country is given by: Indeed, no country knows for sure how it will be affected in particular, but each expects to benefit (B/C).(dbt/dQ) = (dct/dQ) from its existence over a sequence of yet unknown future events. The key element in the creation of an The left-hand side of the equation shows that international organization is the voting rules. Frey the marginal contribution depends on the relative (1997) identified three primordial aspects about it: what costs and benefits sharing (B/C). The right side of kind of decision rule has to be applied for what kind the equation shows the marginal cost of production of issue? Majority rule? Veto voting? Second, within of an organization. The equilibrium is presented in the majority rule the size of the majority has to be Figure 1. determined (Buchanan & Tullock, 1962; Rae, 1969). Third, the voting rules have to specify the number of votes attributed to a member nation. This last aspect is crucial considering the particular situation of East Asia with a country (China) whose population represents 95% of the total population of the three countries. This aspect is not simply a formal question. Should the voting rule adopt a one nation-one vote system, or voices in function of the total population, or voice in correlation with the GDP, or voices considering how much a country will fund the organization? Indeed, the voting rules may favor a nation or another. For instance, in the one nation-one vote system, South Figure 1. Organization equilibrium. Korea will be advantaged because its population and Source: Frey, 1984, p. 217 its GDP are less important. This aspect also underlines the kind of partnership developed by the organization. Empirical applications of this model showed that the China may, for example, promote an extension of the marginal curve skyrockets (Frey, 1984). This is because organization to Mongolia and North Korea. Japan it is increasingly difficult to reach an agreement and and South Korea would certainly reject the proposal to satisfy all stakeholders’ interests when the activity because the newcomers would be too favorable to of the organization expands. The curve of marginal China and also because it would favor a voting rule in political contribution also decreases sharply. relation with the size of the population (here again it It is understandable, therefore, why regional would give an advantage to China). integration in Asia can sometimes feel sluggish after The public choice approach of IPE sees the creation initial encouraging progress. Indeed, if we shift of an international organization from a cost-benefit from ASEAN five founding members to ASEAN as perspective. Fratiani and Pattison (1982) proposed a it is today (i.e., with five additional members), to model of the creation of an international organization 86 P. André

ASEAN+3, to a hypothetical structure welcoming all East Asian nations (ASEAN+3 + Taiwan + Mongolia and even India, Bangladesh, and Sri Lanka) then there is a progressive withdrawal to the total benefits earned by each member country. Benefits for each country are assumed to be positively correlated to its share in global GDP or international trade (Fratianni & Pattison, 1982, p. 244). Fratianni and Patisson argued it is because of its sharp falling B/C ratio that the US had a lesser interest in international organization produced international public goods (i.e., the point of equilibrium moved to the left due to a translation of its marginal curve policy contribution—cf. Figure 1). On the other hand, B/C ratio increased for nations like Japan, , Benelux, and EU countries in general. This Figure 2. The effects of alternative decision rules. Source: Frey, 1984, p218. led international organizations to increase their output. Figure 2. The effects of alternative decision rules. It explains the rise of Japan on the international stage The marginal contribution curve is considered as and also—probably—a part of rising tensions with Source: Frey, 1984, p218. given. Q is the optimal output of the organization from China. These countries want the weight of international the point of view of a particular country. This output organizations to be more important. The marginal contribution curve is considered as given. Q is the optimal output of the declines from Q when decisions are taken at the simple Another consequence of this model is that large 1, majority, to Q when a qualified majority is required, international organizations (i.e., IOs with a large 2 organization from the pointand to of Q view when ofunanimity a particular is required. country. This This exhibit output declines from Q1, number of member states) have become less efficient 3 allows the understanding of two features of regional because the sharing of benefits perceived by the when decisions are takenintegration at the simple in East Asia:majority, the multiplicity to Q2 when of cooperation a qualified majority is required, dominant country (the UK yesterday or the US today) projects; and the difficult coexistence—within the same fell. This led to less cooperation. Instead of a hegemon and to Q3 when unanimityinstitution—of is required. putative This exhibitregional allowshegemons theunderstanding (China, of two features providing international public goods partly in its Japan, or even, in a wider perspective, India). If one own interest, the dominant force is now a relatively of regional integration inof Eastthe countries Asia: the is already multiplicity dominant of in cooperation an organization, projects; and the difficult small group of countries, each of them is reluctant then accepting that another power in the international (or refuse) to provide a public good. This model coexistence—within theorganization same institution—of would mean thatputative the equilibrium regional for hegemons the (China, Japan, or provides an interesting formalization of the system, first country is moved to the left on the exhibit. It but it is only the first step toward an economic theory even, in a wider perspective,concretely India). means a contractionIf one of ofthe the countriesoutput provided is already dominant in an of international organizations. Operationalization of by the international organization. theoretical concepts is rather low especially regarding The reason of these curve moves is that the marginal the extent of benefits. organization, then accepting that another power in theinternational organization would mean cost curve make an upward and leftward translation Decision-making is an important element in the because of an increase in the cost of the decision- analysis of international organizations.that the equilibrium It has an for the first country is moved to the left on the exhibit. It concretely making: an agreement when the rules become more impact on profits a country may get from the supply “strict” (the endpoint being the unanimity rule where of a public good. From a country’smeans perspective, a contraction the of the output provided by the international organization. everyone is able to block the decision) and the interests formal rule that defines how decisions should be made of other members should be more considered. Under within the international organization canThe have reason a large of these curve moves is that the marginal cost curve make an upward and these conditions, there was, logically, a proliferation effect on the estimated costs to provide a public good. of association project in which each regional power Let’s consider Figure 2 which is an extension of leftward translation becauseis dominant. of an increaseThe number in theof voterscost of of thea particular decision-making:an agreement Figure 1. country (or group of countries) under the rule of formal when the rules become decisionmore "strict" determines (the the endpoint “power” beingof the country the unanimity within rule where everyone

is able to block the decision) and the interests of other members should be more considered.

Under these conditions, there was, logically, a proliferation of association project in which

each regional power is dominant. The number of voters of a particular country (or group of

15

An International Political Economy Perspective on Regional Integration Process 87 the international organization (Frey, 1984, p.219). who a priori oppose each other _ decide to “Power” is often a very elusive concept. In this case, collaborate? “Power” can be defined from an operational point of . How do these three countries overcome the view as a chance to affect the outcome of a decision. risk of loss of resources linked to the alleged It is influenced by controlling the pivot vote i.e., the opportunism of the partners? vote that transforms a non-winning coalition (e.g., a . And finally, for what purpose are these three minority in the case of a simple majority vote) into a countries involved in such complex relations? winning coalition (a majority). The theory of public choice is not only useful in analyzing the consequences To answer these different questions, it is proposed to of the decision rules in international organizations. It use the business administration concept of coopetition is also a great help in choosing the most advantageous to analyze the trilateral relations in Northeast Asia. In voting system given the circumstances. business administration, coopetition is a strategy that involves working with some of its competitors to try Coopetition to Manage Diverging Ambitions to capture a common benefit. It is, therefore, possible to propose a first general definition of coopetition Framework of Analysis which would be the opportunistic and simultaneous Relations between China, Japan, and South collaboration between different economic actors Korea are ambivalent. On the one hand, the tensions who are also competitors. The importance of the idea are increasing. The political tensions are: Senkaku of ​​simultaneity in coopetition must be underlined (China-Japan), Takeshima (Korea-Japan), Terminal (Granata & Marques, 2014, p. 3). Coopetition is, High Altitude Area Defense (THAAD ) (China- therefore, not an alternation of phases of cooperation Korea), women of comfort (Korea-Japan), historical and competition; but both at the same time. By refining revisionism (Japan-Korea + China), are support to a little, one can, thus, say that “co-operation is neither North Korea (China-Korea). There is also the economic an extension of the theories of competition, nor an tension on China’s economic retaliation against extension of the theories of cooperation. It is defined as the tourism sector in June 2017 due to THAAD. In a system of actors who interact on the basis of a partial general, these three economies are large exporters congruence of interests and objectives” (Dagnino, with fairly marked protectionist tendencies. Also, the Le Roy, & Yami, 2007, pp. 87–98). In the light of upgrading of Korean and then Chinese corporations experience, it can be seen that rivals are cooperating through economic development has only exacerbated on a number of issues. But how can a government competition with Japanese firms, thus hampering simultaneously carry out cooperation strategies with a rather “harmonious” form of regional division the one who becomes a partner or opponent? The of labor, in which Japanese firms were leaders and Aristotelian logic of the Cold War tells us that it is involved in innovation, Korean firms would provide impossible. But the realistic thinking of international intermediate goods, and Chinese firms relied on relations shows that this is common practice. At a time low labor costs. However, calls for co-operation, at of and transnational issues, it seems that least at the governmental level, are not the result of most of the actors—corporations as governments— greater interdependence which would naturally lead have made theirs the description Kissinger made of to cooperation; but rather the idea that facing rising Stalin “he had no friends, only interests” (1994, p. 398). tensions, cooperation would cool down the game and It is why this use of business administration avoid escalation. becomes meaningful and interesting because the The trilateral relationship in Northeast Asia, thus, phenomenon is more common and has been the subject raises some questions: of abundant literature. What business administration teaches us is that “there is an opposition between a . Why do countries that often perceive competitive paradigm that recommends confrontation themselves as competitors (at best) and and deters from cooperating” (D’Aveni, 1994), a 88 P. André relational paradigm that makes the ability to cooperate Boyd, and Hanlon (1997), although paradoxically the foundation of the firm’s competitiveness (Dyer & they do not use the term “game-based” approach (i.e., Singh, 1998). Between these two opposite perspectives, a resources-based view approach and theory of social several authors affirm that companies have interests networks approach). A firm can have four rent-seeking to seek both the advantages of competition and those behaviors (see Table 1). In a monopolistic behavior, of cooperation (Bengtsson & Kock, 1999; Hamel, the firm chooses not to be aggressive or cooperative. In Doz, & Prahalad, 1989; Brandenburger & Nalebuff, cooperative behavior, it decides to favor co-operation 1996; Dagnino et al., 2007, p. 88). In management, it to the detriment of competition. In a competitive is generally believed that these new behaviors cannot behavior, it is the opposite. Finally, in “syncretic” be understood with conventional strategic references. behavior, the company develops both aggressive “Coopetitive strategies cannot be understood as a relationships and cooperative relationships. simple variant of competitive strategies, nor can they Finally, the third major contribution to the theory of be understood as a simple variant of cooperative coopetition is made by Bengtsson and Kock (1999). For strategies” (Le Roy & Yami, 2007, p. 84). these authors, the relational mode will depend on the Coopetition, therefore, intends to overcome relative position on a sector (strong or weak) and the the duality of co-operation/competition, which has need for external resources. There are four relational provided a new strategic doctrine that is based on modes: coexistence, competition, cooperation, and three fundamental contributions (Dagnino et al., 2007, coopetition. pp. 88–89): Nalebuff and Brandenburger (1996) saw More recently, Dagnino and Padula (2002) refined coopetition as a rapprochement of interest between the general model by proposing to distinguish four “complementors” (Dagnino et al., 2007, p. 88). This forms of coopetition according to the number of rapprochement of interest appears when competition competitors involved in the cooperation and the and cooperation occur simultaneously. The second number of activities. fundamental contribution was proposed by Lado,

Table 1 Rent Seeking Behavior

cooperative orientation weak strong

competitive strong Cooperative behavior syncretic behavior orientation weak Rent seeking monopolistic behavior Rent seeking competitive behavior

Table 2 Relations Among Competitors

Relative position on the branch strong weak strong coopetition cooperation Need for external resources weak competition coexistence An International Political Economy Perspective on Regional Integration Process 89

Table 3 Forms of Coopetition

Number of firms two More than two number of activities in one simple dyadic coopetition coopetition in simple network the external value chain several complex dyadic coopetition coopetition in complex network

Luo (2007) believed that when a company faces Coopetitive strategies can therefore only be a major rival, there are four possible levels of co- understood as dynamic processes of fixed operation: duration. (Dagnino et al., 2007, p. 93)

. Rivalry Coopetition is, thus, established to a certain extent, . Adaptation and then the involved actors resume a confrontational . Isolation position—which means that the TCS or other . Partnership collaborative projects between the three countries will not necessarily lead to relaxation or evolution Once the theoretical framework set, let us try to of mutual perceptions or even to the creation of see what insights coopetition can provide in trilateral common interests. This, therefore, questions some relations in Northeast Asia. From a theoretical point assumptions about conflict resolution. For instance, of view, the concept of coopetition can be seen as it cast doubts over conflict resolution through long- a realistic re-appropriation of a liberal reality in run cooperation process (see e.g., Arai, 2009). It also an international political economy: cooperation. raises doubts about a synthetic material-ideational Coopetition is liberalist because it refers to collaboration analytical framework which would suppose that an between different agents that are not necessarily state- evolution of the balance of power at the regional level controlled. Coopetition is realistic because it borrows (the material dimension) may lead to an evolution of from Machiavelli the idea that if you cannot kill your mutual perceptions of agents (the ideational level; see enemy, do it, otherwise make you a friend. Coopetition e.g., Cha, 2000). is also realistic because it does not postulate that cooperation leads to appeasement or cessation of Coopetition as a Strategy of Economic War rivalry and confliction. Dagnino et al. (2007, p. 95) saw coopetition as a Das and Teng (2000) showed that coopetitive “system of actors who interact on the basis of a partial strategies can be considered unstable by nature congruence of interests and objectives. This conception (Dagnino et al., 2007, p. 93). of coopetition provides the first basis to understand this concept and to clearly distinguish co-operation A coopetitive relationship can be interrupted from competition and cooperation.” This definition at any time by a partner-adversary, either is interesting because it highlights two fundamental because it renounces competition ... or because elements: first, “the interdependence between firms/ it renounces cooperation. The coopetitive [actors] is based on a positive and variable sum strategy therefore implies acceptance of the fact game which must bring to partners the mutual but that no relationship with an adversary partner not necessarily equitable benefits. In a positive and is sustainable in its form and substance. It is variable sum game, the interdependence of firms/ by nature unstable and evolutionary, without [governments] is based on a function of partially it being possible to predict how it will evolve. convergent inter-firm interests” (Dagnino et al., 2007, 90 P. André p. 95), but only partially. It is this partial aspect that Diverging Strategies suggests a pessimistic outcome to a strategy of co- operation because the limit of convergence of interests General Considerations makes the actors continue to be rivals. In other words, coopetition does not seem to be a “strong enough” General principles of coopetition have been set, and process to lead to a convergence of interests that would it shows that the logic of coopetition is transferable to lead to a peacebuilding process. international relations. It can thus be assumed that the An argument against using the concept of coopetition strategies of the various players involved lead them in international relations would be to say that the very to choose the coopetitive option. We have seen above existence of intelligence services makes coopetition that the coopetitive choice can be explained by the very limited. I propose to make an analogy between inability to modify the geopolitical or geo-economic intelligence and economic intelligence. Salvetat and environment. Second best by nature, coopetition can Le Roy (2007) showed that economic intelligence only produce tradeoffs, since the actors involved are (EI) is an instrument traditionally dedicated to the at the crossroads of two orientations. If one of the defense and the conquest of market shares. EI is actors does not cooperate, then it avoids the takeover essentially an aggressive view of the relationships of their know-how, or their political capital, or a between competing firms. It allows a company to both public international good that the agent would be able learn about its competitors and develop an ability to to provide (see diagram 1). If the actor collaborates, destabilize them. Rivalry behaviors are becoming less benefit from important advantages can be reached. As and less frequent, giving way to “coopetitive” behaviors a consequence, the agent is exposed to possible attacks that combine competition and cooperation. A priori the from “allies” (Oxley & Sampson, 2004). It is, therefore, idea of intelligence—whether​​ services or IE—is based necessary to grasp the strategic analysis made by on rivalry and lack of cooperation does not fit into China, Japan, and South Korea respectively. Based on coopetition. However, several authors in management these analyzes, it will be possible to determine whether consider that coopetition makes it possible to collect or not a coopetitive scenario is present. information from partners not necessarily friends, that The situation of East Asia is often analyzed under the is to say, competitors (Goerzen & Beamish, 2005; sole prism of the USA-China relationship. Considering Kogut, 2000; Powell, 1990). However, the pivotal role of the USA in the region, such analysis makes sense (Inoguchi & Ikenberry, 2013). The Today, companies [like governments] are at regional equilibrium can then be represented as in the crossroads of two orientations. Avoiding Figure 3. However, it has a disadvantage. Assuming cooperation with competitors prevents them that the U.S. maintains its influence, this assumption from appropriating all or part of their know-how seems relevant because it is reasonable to consider that [of the product of an international public good South Korea and Japan will remain in the security line in the political case], but this deprives the firm/ set by Washington. Considering the hypothesis of a [the government] of the gains from cooperation. decline in American power in Asia-Pacific, it must first Conversely, cooperating with competitors be clarified that this hypothesis is always in the case leads to significant benefits, but exposes the of a relative decline in America, and in the case of the company to possible attacks by its “allies”. EI/ perception of a decline by Japan and Korea. [intelligence services] can then play a hybrid role in competitive and coopetitive detection. It can play an active role in the adoption of a coopetitive behavior. (Salvetat & Le Roy, 2007, p. 149) An International Political Economy Perspective on Regional Integration Process 91

Cooperative China

Independence of Asia � De facto G2 �

US Status Quo US Decline

New Chinese World US‐China Strategic Order � Competition �

Hegemonic China

FigureFigure 3.Four 3. Four scenarios scenarios in East in EastAsia. Asia. Source: Matsuda, 2015 Source:Matsuda, 2015

So far, the futureSo far, ofthe Eastfuture Asia of East has Asia diverging has diverging views.Case Realists ③: Chinawould ratherwould emphasize be so powerful that views. Realists would rather emphasize on power cooperation would not be necessary. transition,on balancing power transition, power, balancing and strengthen power, and streof ngthen of alliances; while Liberalists would alliances; while Liberalists would rather focus on Case : the coopetitive strategy will first be a matter rather focus on globalization, regional state, and regional integration; and Constructivists globalization, regional state, and regional integration; of US and China. But as long as South Korea and Constructivistsconsider that consider keys to that the problemkeys to theare misunderstproblem anding, strategicand④ distrust Japan, lackmaintain of exchanges, their partnership with are misunderstanding, strategic distrust, lack of America, regional relations will not develop in exchanges,and and historical historical reconciliation. reconciliation. an atmosphere of mutual trust. So this would Let us then lookLet at us the then possible look at scenariosthe possible for scenarios Japan for Japan andlead Korea: to coopetitive relations between South and Korea: Korea, Japan, and China. Case : strengthening the regional dialogue. However,is this possible given the mutual Case : strengthening the regional dialogue. As previously summarized in Figure 2, an mistrust? In this case, it will be more of coopetition than of co-operation. However, is this possible given the mutual international organization can provide an international ① mistrust?Case : KoreaIn this and case, Japan itare will relegated be more to the of background. public Because good to of its their members. alliance andIn a their sense, it privatizes a coopetition than of co-operation. public good to the sole use of its members. As Figure strategic dependence on Washington, they can be2 seenshows, as thefollowing more cooperativethe trend that an is, agent will be, the Case : Korea and Japan are relegated to the more the IO will have to offer. In the case of a simple background. Because of their alliance and majority decision rule, it means that the willingness of ② 24 their strategic dependence on Washington, cooperation is high enough so that each agent is ready they can be seen as following the trend that to accept concessions and accept a decision which is, cooperating. But a G2 implies a rivalry. To may not maximize its own interests. Such a situation the extent that Japan and Korea will remain as is obviously not the case in Northeast Asian relations. rivals, as we may reasonably assume, in the Mutual distrust remains very high (Rozman, 2004). American orbit then, again, coopetition. But Not only South Korea and Japan remain skeptical soft coopetition. about China’s intentions, and conversely, South 92 P. André

Korea and China remain cautious, Japan does not go changing its international environment. China has back to its old imperialistic trends. However, South always considered that contemporary international Korean-Japanese relations can be more labeled as a institutions are inherited from Yalta and they serve quasi-alliance. Indeed, the two nations have a common Western and American interests in particular. Despite ally (the USA) and common threats (North Korea and the wish to develop new institutions (Shanghai potentially China), but it is not enough to make one Cooperation Organization, AIIB), China had to yield to the ally of the other. the evidence: China-backed IOs never managed (so far) to fundamentally change the geopolitical environment National Interests of the region. Facing this "semi-failure," China has, On the Chinese side (see Zhao, 2012), Beijing can therefore, been forced to "temporize" and opt for a be considered suspicious of its two neighbors. Because coopetitive partnership. of their alliance with the U.S. since the cold war and Historically, it can be reasonably assumed that also because of Japan’s military past. This is truer in South Korea was for a long time diplomatically isolated that the Asian sense of identity traditionally remains (see Armstrong, Rozman, Kim, & Kotkin, 2006). weak and underdeveloped in China. The result is a This lack of international influence and network can rather weak sense of common identity and, conversely, be seen as a disadvantage for ’s foreign policy. a growing national pride. Fueled by economic success, South Korea was admitted to the only the historical legacy and a state nationalism for 20 in 1991 (such as North Korea), and relations were not years, China believes to be the great power of the normalized with China until 1992. Korea's diplomatic 21st century (Dent, 2008; Zhang, 2010). Some might relations were thus essentially developed with the say that the point is not that China would have to get (which is not an Asian country) and Japan this status, but rather to get back to a place it deserves (former colonial power). This diplomatic isolation has (Moïsi, 2017). not fostered the development of a sense of common Asian affiliation or even of diplomatic co-operation. From its own perspective, the People’s Republic The relations with Japan and China were traditionally of China (PRC) is still primarily a regional cooperative (in the sense of carrying out actions with power in Asia (at least at present). In this a common objective). The rare examples of regional 7 context, its relations with Japan and North and co-operation derive more from coopetition. For a South Korea occupy a special position. The time, South Korea was the principal architect of the importance of Northeast Asia for China stems development of cooperation at the regional level. from its geographical proximity and a tradition This was the regional counterpart to Kim Dae-jung’s of active cultural exchange, as well as from inter-Korean policy of the sunshine policy. The former historical pressures (between China and Japan), Korean president had formulated an ambitious vision alliances (between China and North Korea), of the East Asian community, and he initiated a debate densely interwoven economies, and the strong whose scope and significance far surpassed those of a presence of the US in the region. (Heilman & simple electoral mandate. On the one hand, this project Schmidt, 2014, p. 145) met little repercussions in the two other capitals of the region, and was abandoned by Korean diplomacy when China’s foreign policy in the era of reforms relied on the Conservatives returned to power in 2008. the idea that the international situation was structured Triangular relations for South Korea are sometimes along “one power and several powers” (一超 多强). studied from the angle of cultural determinism. Edward In this respect, Xi Jinping’s leadership can be seen as Luttwak (2012), for example, considered that Korea a turning point. It seems clear that China is looking has long lived in a strong reverence of China and to establish a bipolar order (Arase, 2017). However, its culture. This has the effect of skewing triangular despite the progress made, China is unhappy. This, relations in favor of Chinese interests. in my view, reflects China's inadequate results in An International Political Economy Perspective on Regional Integration Process 93

No doubt more significant is the finding that which does not control the domestic policy of North South Koreans are more inclined than Japanese Korea. Nevertheless, Seoul is well aware that China or Europeans to believe that China will become keeps a strategic interest in not addressing the issue the country’s most important trade partner, of the North Korean nuclear program. Eventually, as ahead of the United States, whose importance Luttwak (2012, p. 174) reminded, “that seems to be is anticipated to decrease. […] South Koreans money very well spent, because it gives the Chinese also have distinctly more favorable views than leaders a reliable leash on North Korea—a leash that is, other respondents of the impact of the Chinese of course, useful only insofar as North Korea continues economy on their interests. Between 2005 and to be aggressive periodically; no leverage can derive 2010 the number that viewed China’s economic from a leash on a dog that never bites.” rise positively remained stable at 49 percent— This ambivalent attitude of China pushes Korea to remarkable considering that China is a direct be so in this game to three. Seoul, therefore, finds an export competitor for the Koreans […]. In interest in cooperation in a limited and reasoned way Japan, those who had positive views of China’s with Japan to contain China, without being allied with economy declined from 35 to 23 percent. This Japan. is the psychological and political background On the Japanese side, there is a limited trust in the of the current strategic relationship between the two other partners, but it cannot ignore the benefits Republic of Korea and China. (Luttwak, 2012, of cooperation (see Miyashita & Sato, 2001; Hook, pp. 171–172) Gilson, Hughes, & Dobson, 2001; Togo, 2005; Renwick, 1995; Pekkanen & Kallender-Umezu, If these figures suggest that the prospects for 2010; Kawashima, 2003). In other words, here again, cooperation with Japan are weak, it would be a hasty there is a context which favors the establishment of a conclusion that South Korea would be inclined to sell strategy of coopetition. The great return of Chinese off its national interest. If Seoul is well aware that power is the main military and strategic threat for the North Korean issue cannot be resolved without Japan. However, Chinese growth is essential for the Beijing, it is not fooled by Chinese interests in the economic future of the archipelago (Bouissou, 2014, equation. On March 26, 2010, North Korea sank the p. 45). The strategic dilemma of contemporary Japan Cheonan corvette causing the death of 46 sailors. On lies there: the rise of China is both its best guarantee November 23 of the same year, artillery fire from and its main threat. Japan needs a stable China for the North attacked (without reason) the island of obvious economic as well as geostrategic reasons. As Yeongyeong, costing the lives of four people. China’s long as Beijing pursues low-profile diplomacy, this official response to every incident in Korea has been posed few problems. However, for 20 years, Chinese to invite the parties to exercise self-restraint—even leaders have become experts at diverting domestic though all incidents are caused by North—and Beijing tensions towards Japan (see Bouissou, 2015; Lam, called to resume China-hosted six-party talks. At the 2006; Shen, 2007). Therefore, the Chinese Communist same time, China has good relations with North Korea: regime, consequently, has, in a way, ensured its stability China’s economic aid corresponds to North Korea’s by a growing nationalism with its main dimension trade deficit with China. anti-Japanese. Nevertheless, it would be an improper conclusion On the relations with South Korea, political to say that China has control over North Korea. The tensions (as previously seen) remain alive. In economic logic works on paper, but it is not so simple. First and terms, Korean firms are increasingly competing with foremost, believing that China would be the only one Japanese multinationals. However, Japan has no able to solve the nuclear crisis would suggest that interest in losing contact with Seoul, especially in the it would have all the power over its “little” North long run. In the short run, Tokyo would be a loser if Korean neighbor. This is an illusion because North bilateral cooperation between China and South Korea Korea has never submitted to the orders of Beijing, progresses. On the one hand, it would isolate Japan 94 P. André vis-à-vis two actors who share the historical dispute with Korea and China, Japan has never managed to with Japan. On the other hand, following the theory of obtain a seat on the Security Council of the United the club (Buchanan, 1965), Sino-Korean cooperation Nations. Likewise, relations with the United States, would deprive Japan of the benefits of possible the cornerstone of Tokyo’s defense and foreign policy, cooperation at the sub-regional level (North-East Asia). remain uncertain. Japan will likely suffer hardship if More fundamentally in the longer run, the interests of its American protector are threatened in East Asia; on the other hand, there are few guarantees “Japan may fear the formation of a [reunified] on the reciprocity of a US commitment to defend Korea of 75 million people so indebted to Japanese interests (in particular case of a border Beijing, revitalized by the contribution of dispute). Tokyo’s strategy is to not put all its eggs prolific population and hungry for growth when in one basket. There is, therefore, at the same time a that of the archipelago will be in full decline, strengthening of the partnership with the United States, and endowed with additional military nuclear developing new partnerships.7 Finally, Japan seeks to capability. It would be for the Archipelago at keep the situation under control and avoid overflow best a formidable competitor, at worst a new by trying to maintain a form of cooperation. However, security threat. The status quo is good for the it is not a question of cooperation driven by common Japanese. Tokyo cannot say it, but Seoul is not interests but rather a negative choice. fooled. (Bouissou, 2014, p. 46) In the end, the three actors understand that they are forced to maintain a form of collaboration, but none Tokyo must, therefore, look for a way that allows has any interest in it becoming real cooperation. Thus, it to maintain relations with each actor to avoid a there is a competitive choice at the regional level in rapprochement of two that would harm it while Northeast Asia. maintaining a certain distance in this rapprochement. It appears that both reasons for cooperation and Conclusion isolationism exist. The paradox is that Japan has been involved in a process of regional rapprochement under I have shown that cooperation between the three the terms of the Prime who has worked the Northeast Asian nations is difficult. The theory of most to strengthen the self-help capacity of Japan. How public choice of IOs shows us that an IO will provide can this paradox be explained? In a national interest less when humanity is required. Given the number of led realistic logic, Japan’s strategic choice should be actors and the mutual mistrust between China, Japan, to increase its military capability; preserve the alliance and South Korea, cooperation can only be achieved with the United States; and broaden its security base through an agreement between the three nations (which by moving closer to other regional actors (South-East amounts de facto to humanity). Nevertheless, there Asia, India, and ; Luttwak, 2012; Bouissou, is no sense of shared belonging, mutual trust, or real 2014, p. 50). It is clear that Japan is concomitantly common interests. Collaboration at the regional level pursuing a precautionary and rapprochement policy is, thus, a matter of coopetition, that is, a simultaneous vis-à-vis China—and to a lesser extent, Korea. Overall, collaboration between competitors. In other words, if as Luttwak (2012) stated, after a period of an attempt there is collaboration in a given domain, the agents of rapprochement and conciliation with China under are nonetheless simultaneously rivals. By a detour by the DPJ cabinets, the Senkaku Islands events marked management, I have shown that the choice to resort a turning point in Japanese-Chinese relations. Hence, to co-operation results from the inability of one or Japan is “disengaging from disengagement.” more agents to modify its environment (in this case However, Japan cannot do it alone for several geopolitical or geo-economic). This is the conclusion reasons. First, Tokyo has shown itself unable to change I draw from the regional policy of China and, to a its international environment: beyond the difficulties lesser extent, Japan and South Korea. By definition, of putting an end to criticism of its militarist past coopetition produces an unstable and evolving process. An International Political Economy Perspective on Regional Integration Process 95

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Wintrobe, 1982). In this respect, the 1997 financial crisis 5 Fratianni and Pattison (1982) showed, for example, that was very revealing. Indeed, most East Asian nations forecasts and policy evaluation provided by international were not part of a regional organization having an organizations are biased in favor of their member interdependent solidarity process. Since these economies governments. were—and are still—relying on exports, East Asian 6 For further developments on the club theory see nations were extremely exposed to fluctuations arising Buchanan (1965), Sandler and Tschirhart (1980), Cornes out of certain economic crisis. Nations like South Korea, and Sandler (1986), and Ostrom and Walker (1997). , or Indonesia had a 7-point loss of GDP growth 7 For instance, the joint award of the football cup in 2002 in annual variation. Then it seems clear that a guarantee to Korea and Japan. Initially, each country submitted and support framework at a regional level can reassure an application. Given the difficulty of separating them, the markets and, thus, it can minimize the scope of the and fearing that the competition would be attributed crisis. to , the two countries agreed to submit a joint 4 As Breton and Wintobe (1982,) argued, “The common application. action of an international organization makes it 8 Liberty roads or TPP are examples of this trend. impossible for the voters to compare alternative policies, in particular with respect to taxation, regulation, and monetary policy. […] This is the “political dustbin” theory whereby an international organization serves as an alibi and scapegoat for local politicians undertaking measures undesired by the local voters and interest groups.” (Frey, 1997, p116)